NAB chairman Ken Henry has shocked Australians with his "arrogant condescending attitude" at the banking royal commission today.

Much of the day has been taken up by a series of increasingly tense exchanges between Henry and senior counsel assisting the commission Rowena Orr QC.

At several points Orr was obviously frustrated by Henry's responses to her questioning about executive bonuses and the bank's fees-for-no-service scandal.

But Henry was also clearly fed up with the line of questioning, repeatedly scoffing openly at Orr's statements and sighing before answering the majority of questions.


In one particularly heated exchange, Orr asked Henry whether NAB's board should have stepped in earlier after customers were charged fees for no service.

"I wish we had, let me put it that way. I wish we had — I still don't know," Henry began, before Orr said: "I would like you to answer my question, Dr Henry. Do you accept that the board should have stepped in earlier?

"I have answered the question how I can answer the question," Henry replied, to which Orr retorted: "I'm sorry, is it a yes or a no, Dr Henry?"

"I've answered the question the way I choose to answer the question," Henry said.

"Well, I would like you to answer my question. Do you accept that the board should have stepped in earlier?" Orr replied.

"I wish we had," Henry said.

"I'm going to take that as a yes, Dr Henry?" Orr concluded.

"Well, you take that as a yes, all right," Henry replied.


The Twittersphere has erupted over Dr Henry's responses, with one social media user describing it as a "shocking moment of disrespect".

Commissioner Kenneth Hayne was also seen raising his eyebrows in response to the tension in the room.

But in typical Rowena "shock and Orr" style, she continued unfazed.

Earlier today, the commission heard NAB's board should have told management that "enough is enough" and to refund customers charged fees for no service promptly.

Instead, NAB spent three years fighting with the Australian Securities and Investments Commission (ASIC) about customer compensation, which Henry said was "absurd".

"There's absolutely no doubt that the reputation of NAB has been tarnished considerably by these matters and the way in which they've been handled," he said.

"I wish that we had said to management, well certainly two years ago, perhaps even earlier, that we had said: 'Enough is enough. Forget about negotiating with ASIC. Just do it — remediate customers'."

In September this year NAB and ASIC finally reached an agreement over the issue.

Meanwhile, NAB CEO Andrew Thorburn said the bank had "accidentally" kept customers' money even though they had not received any service in exchange for it.

He said while the practice was wrong it was not dishonest as it had happened by mistake.

NAB has charged the estates of more than 4000 dead superannuation customers to the tune of A$3 million ($3.2m) — and ASIC has taken legal action over one of the fees-for-no-service issues which involved A$100m charged to hundreds of thousands of superannuation customers.

Henry also told the commission it could take ten years for NAB to embed a culture that would correct previous misconduct and put customers first.

AMP chair Mike Wilkins also faced questioning from senior counsel assisting the commission Michael Hodge QC this afternoon, revealing the company would repay 107,735 people A$440.4m for inappropriate advice and fees for no service.

The hearing continues.